Dec 29, 2011

Sunoco, Shale shine light on need for new energy policy

Guest Column by Kevin Moody

A range of important issues are making Pennsylvania the center of a challenging debate over energy, starting in the east with last week’s announcement of the closure of the Sunoco refinery in Marcus Hook, and continuing to other regions where coal mining and natural gas drilling are making national and regional headlines. The Marcellus shale has put an even brighter spotlight on the commonwealth, and early production rates show a long-term and huge potential for natural gas from this geologic formation.

All of this positive and negative news points to a broader concern: Our nation’s energy policy sorely needs to move in a new direction. Reliable, affordable energy supplies are essential to a viable economy. New jobs are created when energy resources are explored, developed and made into products such as refined gasoline at facilities such as those in Marcus Hook and Linwood. Other benefits accrue to communities where this occurs, and elsewhere. Given the state of the nation, one would think that lawmakers, regulators and leaders in Washington would get it.

You do not have to look any further than the president’s speech about jobs and the economy in Scranton on Nov. 30 to see how hostile our leaders can be toward the development of our oil and gas reserves. Despite the fact that counties immediately west of Scranton are enjoying some of the lowest unemployment rates in the nation due to the surge in natural gas drilling activity, not a single mention of “oil” or “natural gas” passed the president’s lips during this speech.

In fact, in the past three years, the administration has done its best to block the development of new domestic oil and natural gas supplies. It is seeking to increase federal regulation of – that is, slow down or prevent — natural gas and oil development in domestic shale formations that are heavily laden with these resources.

There are similar issues in the attempts to keep the Marcus Hook refinery open through a buyer: A mature facility faces a moving target of environmental regulations from the U.S. Environmental Protection Agency that seems determined to regulate these industries out of business, eliminating thousands of jobs in the process.

Now, to make energy matters worse, the president has delayed until after the 2012 elections a decision on allowing construction of the Keystone XL pipeline between Canada and the U.S., threatening the creation of about 20,000 jobs and preventing the flow of an additional 830,000 barrels of Canadian oil to U.S. refineries on the Gulf Coast.

Although the president’s anti-oil and natural gas actions might sound well to his political base prior to the 2012 election, they put the nation’s long-term economic and energy health at risk.

These vital considerations, however, are not the focus of today’s energy policy debate. They have been supplanted by fear — a campaign of fear of air pollution, fear of water contamination, fear of health effects, and other often unsubstantiated worries that have been become part and parcel of the energy conversation.

The fears are fed by the scare tactics that have become a staple in political and public interest campaigns. Even the president has used fear as a means to avoid making tough decisions that could improve U.S. energy security.

Similarly, anti-drilling groups use fear mongering as a weapon against hydraulic fracturing here in Pennsylvania. They assert that hydraulic fracturing will poison our drinking water and harm human health. In one recent demonstration, protesters even donned cow costumes and claimed that the fracturing process would poison milk supplies at schools.

As long as unfounded and irrational fears overshadow the facts, elected officials will find it difficult to make sound energy policy decisions. They know that misled and frightened voters aren’t going to focus on the benefits of oil and natural gas production, even when it helps their unemployed neighbors find jobs. According to the Pennsylvania Department of Labor and Industry, an estimated 214,000 Marcellus shale-related jobs have been created in the commonwealth since 2008, but even job growth pales in comparison to the irrational fear-of-fracking delirium.

Instead, elected officials will find it politically expedient to throw taxpayer money at so-called green energy companies even if the projects aren’t commercially viable.

There are times when fear is a positive force. It reminds us to buckle our seat belts, blow out candles to prevent fires, and teach our children to look both ways before crossing the street. But it should not be used as the basis for key policy decisions that could frame our economic and energy future.
Kevin J. Moody is vice president and general counsel for the Pennsylvania Independent Oil & Gas Association.

Humor or Hubris?

Did you hear the one about the leftist Democrat who posed as a Republican senator?

Everyone's favorite RINO (Republican in Name Only), and retired Pennsylvania senator, Arlen Specter, is now a stand-up comic.

That's right: the most unfunny person to ever walk the halls of the United States Congress, is telling jokes at a Philadelphia nightclub. Click here to view the former politician performing his act Tuesday night.

Isn't this a little undignified for a senator, however? The career politician took the stage at Helium Comedy Club, and some his jokes were even R-rated. He also took potshots at current politicians, including New Jersey Gov. Chris Christie (R) and former U.S. President Bill Clinton (D).

"I called Clinton up on his 65th birthday and I said, 'Bill, congratulations on being 65. How do you feel?' He said, 'I feel like a teenager. The problem is, I can't find one,'" he quipped.

Specter, who earned the moniker "Snarlin' Arlen" for his angry disposition while in Congress, would seem an unlikely comedian. But, many comics, including Johnny Carson and Conan O'Brien, have had reputations for acting like jerks in "real life."

And, if Specter is able to make people laugh, why shouldn't he be on stage? At least he's not harming the nation anymore.

Don't get me wrong, It is nice to see Specter make a fool out of himself. But in the end hubris isn't funny.

Dec 28, 2011

Santa has misplaced Corbett’s wish list

Guest Column by Nathan Benefield

For Christmas this year, Gov. Tom Corbett hoped the Legislature would gift wrap three things he could tie a bow on: An education reform package that included school vouchers, state liquor store privatization and legislation addressing gas drilling in the Marcellus Shale.

Unfortunately, the Legislature played more Grinch than giver, and the consequences of failure to act remain clear.

Inaction on school choice traps students in violent and failing schools, where they see a violent act every 17 minutes.

Pennsylvania loses jobs and tax revenue because residents spend hundreds of millions of dollars buying liquor in other states.

And more jobs lie in the balance as natural gas companies are hedging their bets for future investment, given the uncertainty of Pennsylvania’s regulation and tax schemes.

Willing to pass the buck to Santa Claus, the General Assembly heads home for the holiday break having delivered no gifts on any of these issues.

Both the Senate and House passed measures regulating gas drilling in the Marcellus Shale. But the House version involves an optional local fee, with funds limited to, for the most part, uncompensated impacts of drilling. The Senate passed a statewide tax it euphemistically calls a fee that would fund a variety of programs unrelated to the impact of the natural gas extraction process. The final bill can be only one of these things.

Likewise, the Senate passed a school voucher bill the governor supports, but it isn’t yet clear if the House will rescue poor kids in violent, failing schools.

Meanwhile, bills addressing the fiscal crisis in the city of Harrisburg, flood damage across the state, and tightening child predator laws following the Penn State scandal all reached the governor’s desk.

These unexpected priorities, brought about by crises and national media attention, took time away from other agenda items.

With the census results in, lawmakers had to redraw both congressional and state legislative districts this year, or early January at the latest.

Both the redistricting commission and the legislative process for congressional mapmaking are inherently political, and every lawmaker seeking re-election (or higher office) has something at stake.

The political reality of the redistricting process ended up consuming all the oxygen in Harrisburg this fall and left other good policy opportunities gasping for air.

While 2011 has been declared the “Year of School Choice,” with 18 states creating or expanding school choice programs, Pennsylvania lawmakers punted to next year.

In the middle of the year, lawmakers claimed they had no time to pass school choice legislation with budget concerns, but would take it up in the fall. When nothing happened in the fall, it has become “wait until next year.”

In contrast, most of the victories in other states occurred early in 2011. Why?

Most states have limited legislative sessions, with deadlines for accomplishments.

Pennsylvania’s full-time Legislature and unlimited sessions tend to lead to severe cases of procrastination.

Encouraging the lack of action on issues such as school choice is the political reality that Pennsylvania’s two-party debate is not between Demo-crats and Republicans. It is actually between the Union Party and the Taxpayer Party.

Unfortunately for taxpayers, the Union Party enjoys a majority in both the House and Senate on key issues where union financial and political power is threatened.

If you want to know why school choice or other union-related bills have stalled, or why politicians in both parties are demanding new and higher taxes, look no further than lobbying by union bosses.

During the past election cycle, the political action committees of the main government and private sector labor unions gave more than $23 million to both Democrats and Republicans.

These heavy hitters include the Pennsylvania State Education Association, the Service Employees International Union, and the American Federation of State, County and Municipal Employees, which account for nearly 260,000 union members in the commonwealth.

The PSEA alone – after raising mandatory dues on teachers and school employees by

11 percent in early 2011 – spent $4.2 million lobbying over the past year.

The lesson is this: With the labor unions working as the taxpayers’ Grinch, the Legislature will fail to deliver not only this Christmas, but for many to come.

If Corbett really wants to put taxpayers, students and workers first, he must use his bully pulpit to overcome a Legislature that is reluctant to oppose the Union Party.

Only then will his priorities become more than just a wish list.

Nathan Benefield is director of policy analysis for the Commonwealth Foundation

Pa. is reaping riches from gas

Guest Column by Rayola Dougher

Many jobs are created because the natural gas industry is investing a lot. In 2009, it spent $3.77 billion in Pennsylvania, according to a study by Natural Resource Economics.

The increase in tax revenue from shale gas development is also significant. The Pennsylvania Department of Revenue says natural gas development generated more than $1 billion in revenue for the state between 2006 and 2010, including corporate taxes, sales taxes and personal income taxes. The Natural Resource Economics study says the state could receive another $3 billion in taxes by 2020. This potentially eases the tax burden for all taxpayers.

How the state and federal government tax and regulate the industry will influence the pace of future development and the extent of benefits Pennsylvanians eventually realize. The state has been a watchful regulator on the environment, and the environmental impacts of natural gas development are being carefully managed.

The industry has upgraded its own standards and is meeting with local officials and the public throughout the state to explain how the exploration and production process works and to address any concerns.

A lot of focus has been on the hydraulic fracturing technology used to free the gas from the shale formations. The process, which has been used safely for more than 60 years in a million wells, involves injecting fluids under high pressure into a development well to release oil and natural gas trapped in shale formations. The fluids are more than 99 percent water and sand with selected additives, which might include a friction reducer similar to canola oil, a chemical such as chlorine to kill bacteria, and a lubricant similar to those found in personal care products. In general, the fracturing process creates cracks or fissures in the rock formations thousands of feet below the surface. The sand helps to “prop open” the fissures to allow the natural gas or oil to move freely to the well.

Before a natural gas well can be drilled, state regulatory authorities approve the engineering design and site plan. The well is surrounded by steel casing and layers of cement, which are mandated by state regulations to protect underground sources of water. Used fracturing fluids are recovered and disposed of according to state and federal laws, and, today, more and more operations are relying on recycling and reuse of water.

Pennsylvania has the good fortune to be sitting on top of massive supplies of a versatile, clean-burning fuel. It has just begun to enjoy the enormous benefits provided by development of this exceptional resource. And, along with the large amounts of shale gas produced in other parts of the country, Pennsylvania’s production is also helping to strengthen our nation’s energy security.

Rayola Dougher is a Senior Economic Advisor at the American Petroleum Institute